The information below applies to working members. If you're retired, please visit Facing a shortened life expectancy to learn about your options.
Overview
The commuted value of your pension is the estimated lump sum dollar amount you'd need today to pay for your future pension. If you die before receiving a shortened life expectancy benefit, pre-retirement death benefits will be paid instead.
If you’re close to retirement, contact us as soon as possible to better understand the implications of applying for the shortened life expectancy benefit before or after you retire. We’ll provide estimates to help you make the best decision for your personal situation.
For example, the value of shortened life expectancy benefits can vary greatly for working and retired members. In addition, choosing a disability or retirement pension instead of a pre-retirement shortened life expectancy benefit will change your available options.
Eligibility
To receive a shortened life expectancy benefit, you must provide a statement from a doctor licensed in Canada, outlining the illness or physical disability that’s likely to shorten your life expectancy to less than two years. Your spouse would also need to consent to the withdrawal. Why? They’ll be forfeiting the right to survivor benefits if you choose this option.
Once you receive the benefit, no further entitlements are provided under the plan, even if you live longer than expected.
Are you retired? Please visit Facing a shortened life expectancy to learn about your options.
Payment options
Shortened life expectancy benefits can be:
- Taken in cash (payable in the form of a cheque or direct deposit to your bank account)
- Transferred to an RRSP, up until the end of the calendar year in which you turn age 71
- Transferred to a Registered Retirement Income Fund (RRIF)
- A combination of these options
Tax implications
Cash payments are subject to withholding tax and may require additional tax payments when you file your income tax return.
If you choose to transfer funds to an RRSP or RRIF, it’s important to understand that the Income Tax Act limits the amount that can be transferred on a tax-sheltered basis. Any excess amounts are paid in cash and subject to withholding tax.
Consider a disability pension
Instead of taking a shortened life expectancy benefit, you may want to consider a disability pension. When comparing the two benefits, keep the following in mind:
| Requirement/Feature | Disability pension | Shortened life expectancy benefit |
| Survivor pension provided | Yes | No* |
| Must terminate employment in education | Yes | No |
| Must stop receiving benefits under an employer-sponsored long-term income protection program | Yes | No |
* The value of the survivor benefit is included in the shortened life expectancy benefit you receive.
What you need to know What you need to know
- To receive a shortened life expectancy benefit, you must provide a statement from a doctor licensed in Canada, outlining the illness or physical disability that’s likely to shorten your life expectancy to less than two years
- Spousal permission is needed because a spouse forfeits the right to survivor benefits if you choose this option
- Consider your payment options, tax implications and a disability pension
- If you die before receiving a shortened life benefit, pre-retirement death benefits will be paid instead
Before you apply Before you apply
- Check with your employer and long-term disability carrier to ensure you'll continue to qualify for medical and long-term disability benefits if you receive your pension benefits early
- Contact us for an estimate of the payment you’ll receive and the monthly survivor pension your eligible spouse or dependents will forfeit if you take a shortened life expectancy benefit
Forms Forms
Shortened Life Expectancy Kit for Working Members, fact sheets
- Shortened Life Expectancy Kit for Working Members (if married or common-law) – e-signature enabled
- Shortened Life Expectancy Kit for Working Members (if not married or common-law) – e-signature enabled
